Why Industry 4.0 is critical for the success of ‘Make in India’

As I am publishing this post, Hon’ble Chancellor of Germany, Ms. Merkel and Hon’ble Prime Minister of India Mr. Modi are visiting Bosch India to discuss the Indo-German collaboration and foster ties on ‘Digital India’ and ‘Make in India’. There cannot be a better time for the growth of manufacturing in India! The government of India has launched its most ambitious national program ‘Make in India’ to make India a global manufacturing and investment destination and to increase the share of manufacturing in the Indian GDP. In order to achieve its objectives and become relevant in manufacturing sector, India needs to address the new global market realities and global supply chain challenges.

  1. Shrinking time to market and product lifecycles in both business as well as consumer segments
  2. Individual consumer needs and preferences are shrinking segment size and demanding mass customization
  3. Social buying and information symmetry shifting power from manufacturers to demand aggregators
  4. Market volatility and global sourcing have increased supply risks beyond the geographical and legal boundaries

These new market realities have created unique challenges for the traditional manufacturing organizations across the value chain.

  1. Marketing teams now need to keep listening to what customers are talking about their brands and generate product insights from those conversations
  2. R&D teams need to translate this diversified voice of customers into multiple product variants and quickly take them to market
  3. Sales teams need to build channel strategy for a diversified product portfolio and forecast the sales of individual product variants
  4. Procurement teams need to source raw materials for multiple variants in sub-optimum volumes and still achieve cost efficiency
  5. Production teams need to address the dynamic market demands and keep managing their change-over times, cycle times, throughputs and production mix to meet production targets
  6. Warehousing teams need to maintain finished product inventory for multiple variants and manage traceability of physical assets in the yard
  7. Logistics teams need to manage transportation costs and product returns at sub-optimum levels
  8. After-sales services teams need to train their service network on service new products, maintain spares inventory across the service network and manage warranties

These challenges cannot be solved by the traditional manufacturing system. Manufacturing economies of the world have so far relied on supply chain optimization, enterprise IT, cheap labor and mass production to be cost effective. However, these techniques are not sufficient to address the new challenges. These require a new architecture that can extend the enterprise information framework to physical things and processes and seamlessly harmonizes both material and information across the supply chain. Industry 4.0 offers such an architecture using cyber-physical systems, cloud and big data analytics to create new capabilities that unify everything in the manufacturing infrastructure.

  1. Social media and consumer data analytics offer proactive intelligence on consumer behavior
  2. Design-to-manufacture (D2M) capabilities introduce intelligence and agility in the design process and reduce design to market time
  3. Multi-variate analytics of history sales data with real-time market information offers variant level trends, seasonality and sales forecasts
  4. Knowledge-based engineering allows procurement teams to define costing and component constraints into R&D development environment
  5. Production analytics and flexible manufacturing shift push-pull boundary upstream allowing a more real-time production response
  6. Yard management improves inventory accuracy by enabling inventory traceability in the yard
  7. Inventory analytics synchronizes inventory at plant, RDC and dealerships to achieve global optimum inventory level thereby cutting down logistics costs
  8. Centralized data storage of all product information (marketing, R&D, production, sales and logistics) allows after-sales teams to quickly deliver service training and also plan for warranty

Industry 4.0 is about streamlining decision making by keeping human element only at critical nodes. Globally, businesses are relying on data analytics to predict demand patterns and flexible manufacturing to quickly respond to these patterns. The next generation manufacturing destinations will need to have these advanced capabilities to solve complex business challenges. And this would require investments in the information assets and digitization of manufacturing in the country.

Compared to other manufacturing economies in APAC and ASEAN, India is uniquely positioned as a large knowledge and information hub with stable economy and skilled manpower. But if we do not invest in Industry 4.0 technology, India will forever be catching-up with other manufacturing economies of the world. The government of India has already initiated projects like Delhi-Mumbai Industrial Corridor (DMIC) with dedicated railway freight corridor (DFC) and multiple new manufacturing cities, logistic hubs and smart residential townships along the DFC. But the contract manufacturing industry in India is still in its infancy and has neither the capacity nor the capability to serve the global clientele.

For ‘Make in India’ to be successful, it is imperative that the Indian manufacturing sector becomes aware of these changing dynamics and invests in building Industry 4.0 manufacturing capacity in India. Without the collaborated and concentrated effort by both the government and industry, ‘Make in India’ would remain just a distant dream.

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